Putting in place a succession plan
Now is a great time for fresh thinking, especially whether your business is heading in the right direction. Step back, re-evaluate and regroup for the coming 12 months, says Basil Long, a senior legal consultant at Croner.
Here are four ways to get started:
Revisit your business plan
- You sweated over it when you went to the bank, but has your business plan been sitting in a drawer ever since? Business plans should ideally be “live” documents, which evolve as your business grows. So, go and have a look at it.
- What are the most profitable sides of your business and are they what you anticipated they would be?
- Is there room to increase your margins?
- Where are you in relation to your first year, three-year or five-year plan?
- Within this, how are your finances looking?
- Be realistic: do you have a good cashflow or are you getting by each month by the skin of your teeth?
- Could you negotiate better terms on any loan, savings or overdraft facilities?
- Are you constantly, and expensively, having to max out the credit card (and if so why)?
- Do you have a tight enough control of your outgoings? You might even be able to improve cashflow by something as simple as changing the date when things go out.
- More widely, are you expecting any significant capital expenses this year – perhaps a new roof or a major new piece of equipment? If so, do you have funds available or should you be starting to shop around for the best loan? Have you got enough of a contingency fund set aside in case something unexpected crops up?
Look at your customer base, marketing and premises with fresh eyes
- Has your customer base changed noticeably over the past year or so? Perhaps your clientele are becoming younger or older, more ethnically diverse, less (or more) cash rich, and how should you adjust your services, brand and pricing strategy as a result?
- Are you communicating in the most effective ways and have you set aside enough of a budget for ongoing promotional activity?
- What about social media or mobile technology – could they work for you and, unless you’re an expert yourself, who might be able to set this up for you in a professional way, and at what cost?
- Is your website as dynamic as it could be?
- Do you know, too, when all the trade shows are so that you don’t miss out on the latest exciting developments?
- And when was the last time you had a look at your price list or gift voucher packs?
- Maybe there is additional competition in your area or, in the current climate, have you actually lost competitors, which could in turn possibly create opportunities?
- Are there any salons shutting down that might be acquisition targets – although you need of course to understand why they failed!
- Because you spend so much time in your salon it can sometimes be hard to see whether the décor is beginning to look tired, or whether fixtures, fittings or equipment need updating. But try and step back and assess whether you need to redecorate or give the salon a facelift.
What about extensions or alterations? Will you need planning permission?
- Might it, even, be time for a move or change of location? Sometimes, if alterations are going to be too costly and cause too much disruption, it can be cheaper and easier to move. At the moment it is a buyer’s market and there may be some good property deals to be had. But don’t forget to factor in the costs associated with moving – including agent and legal fees.
- If the property is leasehold, do you know when your lease is up for renewal or when a rent review is due? If you have a break clause or are coming to the end of the lease and want to move on, make a note in your diary of when you will have to serve notice by. Are there, too, any obligations in the lease to redecorate?
Get serious about contracts, licences and insurance
- With any insurance it’s a good idea to give yourself enough time prior to expiry to look at alternative quotes rather than automatically renew – so now’s the time to check renewal dates.
- Are you adequately covered or have you made purchases that now mean you are under-insured, a common failing for small businesses?
- Similarly, has anything affected your public liability insurance and is your employer liability insurance up to scratch?
- It’s not the most exciting of jobs but do carve out some time to ensure all relevant licences are up to date and, again, that you know renewal dates. Think not only PPL or PRS for music licences but also the TV licence if you have screens, an alcohol licence if you have one and any other consents you may have from the council or elsewhere.
- Do you lease equipment or have hire-purchase agreements? If so, can you get a better deal or negotiate an upgrade? What is the situation regarding final payments or terminating an unwanted agreement if you no longer want the equipment? Do you have rolling contracts for waste management, cleaning, marketing or your utilities and are they good value? Be warned, though, these usually have very specific termination provisions and if you do not serve notice correctly you could end locked into an unwanted contract.
- Of course, don’t forget to renew your NHF membership!
Give some power to the people
- Look around your salon – do you have the appropriate number of staff?
- Just as importantly, is everyone happy; are you challenging and engaging your staff or do you keep losing people and have to go through the expense and hassle of hiring and training up new faces? If it’s the latter, is there a reason why?
- Do you, too, have any planned departures on the horizon, perhaps a retirement or someone heading off on maternity leave? What contingencies do you have in place for eventualities like these happening unexpectedly?
- It’s not the sort of conversation any of us likes to have, but is there the prospect of redundancies this year? Might there, too, be more flexible ways your staff could work that might help you avoid wielding the axe, though any contractual changes in terms and conditions will of course need to be managed carefully, and you may need some professional guidance.
- Another area to consider is training and development. Are there members of your team who could benefit from having more skills? If so, how will you go about offering those and through what providers?
- What will be the progression plan for any apprentices who are qualifying this year?
- You may, too, want to examine the staffing implications of expanding the number of chairs in your salon or adding products or services. Hopefully, the year ahead will bring successes as well as challenges.
- Either way, a bit of forward planning, preparation and thinking should make your salon better able to roll with any punches as well as maximise any opportunities that come your way.
If you read nothing else, read this….
- Take stock of your business direction
- Look afresh at your business plan, how your customer demographic is changing and whether your marketing can be improved
- Reassess what your needs will be in terms of finance, capital spending and investment in your premises
- Ensure all contracts, licences and insurance are adequate and up to date
- Don’t forget staff training and development